Industrial: ZENERGY (03677) rating has been upgraded to "buy", investors are advised to pay attention to the timing of their layout.

Industrial has published a research report, predicting that ZENERGY (03677) will have a net profit attributable to shareholders of 12.90 billion, 18.76 billion, and 25.98 billion yuan in the years 2026-2028, with year-on-year growth rates of +59.6%, +45.4%, and +38.5% respectively. As of the close of trading on April 14, 2026, the company's stock price corresponds to PE ratios of 13.6x, 9.4x, and 6.8x for the years 2026-2028. On April 14, 2026, a large-scale lifting of the company's pre-IPO share capital restrictions occurred, releasing risks; on the same day, the company's controlling shareholder issued a 1-year lock-up commitment, demonstrating confidence. The bank is optimistic about the company's long-term growth prospects, taking into account the risks of share capital release and the attractive current valuation, and has raised its rating to "buy," advising investors to pay attention to the timing of entry into the market. The main points of Industrial are as follows: ZENERGY has a pragmatic operational style and possesses a DNA for automotive components. The company has previously focused on passenger car batteries, using differentiated approaches such as platform-based products and flexible manufacturing to drive shipment growth and profit realization, leading to significant increases in revenue and profits in 2025. The company's total production capacity is expected to double in 2026, with energy storage capacity set to be released soon, creating a second growth curve; at the same time, it is expanding into emerging products such as aviation power batteries to broaden its long-term prospects. In 2025, volume and profit both rose, exceeding expectations. In 2025, the company's lithium battery shipments increased by +66.7% year-on-year to 19.82 GWh, driving revenue up by +57.9% to 8.101 billion yuan, with power battery revenue accounting for 94.8% and energy storage and other revenue accounting for 5.2%. Due to higher capacity utilization and increased economies of scale, the company's gross profit margin increased by +3.8 percentage points to 18.4%; consequently, the company's gross profit increased by +99.3% year-on-year to 1.491 billion yuan. During the same period, the company's net profit attributable to shareholders increased by +788.4% year-on-year to 809 million yuan, and the net profit margin attributable to shareholders increased by +8.2 percentage points to 10.0%; of this, joint ventures contributed 360 million yuan, while the company's main business contributed 449 million yuan, with the net profit margin in the main business increasing by +9.7 percentage points to 5.5% year-on-year. Great elasticity in production capacity release. In 2025, the company added 10 GWh of new production capacity, bringing the year-end total capacity to 35.5 GWh, and is planning to start production of 15 GWh of power and 20 GWh of energy storage batteries in 2026, with a total capacity of 70.5 GWh by then. In addition, the company plans to have 50 GWh of flexible energy storage capacity, targeting applications in long-term energy storage, computational power centers, decentralized power supply modes, as well as in sectors such as new energy vehicles, aircraft, Siasun Robot&Automation, and marine industries. All the above-mentioned production capacities are located in Changshu, facilitating synergy. Increased market share in passenger car power batteries. The company cooperates with customers to develop standardized battery cells and platform-based battery packs; flexible production capacity switching orders comes at a low cost, and with a high proportion of new production lines, it has a competitive advantage. According to the China Automotive Power Battery Industry Innovation Alliance, in 2025, the company's installed capacity of new energy passenger car power batteries in China increased by +62% year-on-year to 15.67 GWh, with a market share increase of +0.57 percentage points to 2.58%, ranking 7th. The company has secured core models from a number of leading car manufacturers such as LEAPMOTOR, GAC Toyota, SAIC-GM Wuling, SAIC-GM, GAC Trumpchi, FAW Hongqi, SAIC Passenger Cars, Volkswagen, and Toyota, with a more diverse customer structure and the potential for further volume growth in 2026. Expectations for the second growth curve in energy storage. In 2026, the company will commence production of 20 GWh of energy storage capacity, expecting to commercially sell four products variants of 100Ah, 235Ah, 587Ah, and 588Ah, for use in home storage, industrial and commercial energy storage, stand-alone energy storage stations, long-term energy storage, and AI data centers, among various other scenarios, to create a second growth curve. Advances in aviation batteries. The company is the first China Shipbuilding Industry Group Power battery enterprise to receive AS9100D aviation certification, has obtained airworthiness certification from the Civil Aviation Administration of China for the Liaoning Tonghang fixed-wing manned electric aircraft RX1E, and achieved mass supply of battery packs for the industry's first two-seater manned electric fixed-wing aircraft, as well as signing an exclusive agreement for the development of the industry's first four-seater fixed-wing aircraft. Additionally, the company has signed an exclusive development project with Zero Gravity Aircraft Industrial Co., Ltd. for the multi-rotor ZG-ONE aircraft model. Risk warning: Intensified industry competition, slower-than-expected growth in shipments, fluctuations in product and raw material prices, customer delivery risks, overseas policy risks, asset impairment, etc.